Correlation Between Soleno Therapeutics and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Soleno Therapeutics and Bausch Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Soleno Therapeutics and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soleno Therapeutics and Bausch Health Companies, you can compare the effects of market volatilities on Soleno Therapeutics and Bausch Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Soleno Therapeutics with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soleno Therapeutics and Bausch Health.
Diversification Opportunities for Soleno Therapeutics and Bausch Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Soleno and Bausch is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Soleno Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Soleno Therapeutics are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Soleno Therapeutics i.e., Soleno Therapeutics and Bausch Health go up and down completely randomly.
Pair Corralation between Soleno Therapeutics and Bausch Health
Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 6.79 times more return on investment than Bausch Health. However, Soleno Therapeutics is 6.79 times more volatile than Bausch Health Companies. It trades about 0.07 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.02 per unit of risk. If you would invest 99.00 in Soleno Therapeutics on August 27, 2024 and sell it today you would earn a total of 5,679 from holding Soleno Therapeutics or generate 5736.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soleno Therapeutics vs. Bausch Health Companies
Performance |
| Timeline |
| Soleno Therapeutics |
| Bausch Health Companies |
Soleno Therapeutics and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soleno Therapeutics and Bausch Health
The main advantage of trading using opposite Soleno Therapeutics and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soleno Therapeutics position performs unexpectedly, Bausch Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bausch Health will offset losses from the drop in Bausch Health's long position.| Soleno Therapeutics vs. Eliem Therapeutics | Soleno Therapeutics vs. HCW Biologics | Soleno Therapeutics vs. Scpharmaceuticals | Soleno Therapeutics vs. Milestone Pharmaceuticals |
| Bausch Health vs. Viatris | Bausch Health vs. Catalent | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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